AUD/JPY: Upside capped by 86.70, risk-off back in vogue?

The cross in AUD/JPY stalled its ongoing recovery mode at 86.70 and drifted slightly lower in Asia, now consolidating near mid-86s amid mixed market sentiment.

AUD/JPY sold-off near 86.90 once again

The retreat in USD/JPY is mainly responsible for the latest down move seen in the cross, as the Japanese currency regained some ground on reports of reduced JGB purchases by the BOJ today.

Moreover, upbeat Japanese core CPI figures combined with mild risk-aversion underpinned the bids for the Yen, restricting further upside in AUD/JPY.

On the AUD-side of the equation, size-able losses seen in the AUD/USD pair, in the wake of increased nervousness ahead of the Jackson Hole Symposium, also collaborates to the renewed weakness seen in the spot.

Looking ahead, risk remains to the downside in the prices, as the Yen is expected to remain in demand ahead of the Jackson Hole Symposium, with risk-off seeping back into the markets.

Technical Levels

Higher side: 86.70/77 (daily top/ 20-DMA), 87 (10-DMA/ round number), 87.26 (50-DMA)

Lower side: 85.93 (Aug 18 low), 85.38 (200 & 100-DMA), 85 (key support)